Frue v. Houghton

• Decision Date: 01 December 1882
• Citation: 6 Colo. 318
• Parties: FRUE ET AL. v. HOUGHTON ET AL.
• Court: Colorado Supreme Court

6 Colo. 318

FRUE ET AL. v. HOUGHTON ET AL.

Supreme Court of Colorado

December, 1882

Error to District Court of Arapahoe County.

THE facts are sufficiently stated in the opinion.

Messrs WELLS, SMITH and MACON, for plaintiffs in error.

Messrs MARKHAM, PATTERSON and THOMAS, for defendants in error.

BECK C. J.

This was a proceeding to enforce an agreement to transfer and deliver a number of shares of stock in the Sacramento Mining Company. The plaintiffs below, Houghton and Curley, obtained a decree for the delivery of the shares of stock sued for and to reverse this decree the defendants have sued out this writ of error.

The first proposition laid down by counsel for plaintiffs in error is, that a court of equity will not specifically enforce a contract relating to personal property.

That courts of equity have jurisdiction to decree the specific performance of agreements, whether relating to real or personal property, is well settled. It is true that special circumstances must exist, entitling a party to an equitable remedy, in order to authorize the exercise of the jurisdiction, but the authorities agree that its exercise does not depend upon any distinction between real and personal estate. The ground of the jurisdiction when assumed is, that the party seeking equitable relief cannot be fully compensated by an award of damages at law. When, therefore, an award of damages would not put the plaintiff in a situation as beneficial as if the agreement were specifically performed, or where compensation in damages would fall short of the redress to which he is entitled, a specific performance may be decreed. The exercise of the jurisdiction depends upon the fundamental rule of equity jurisprudence, that there is not a plain, adequated and complete remedy at law. 1 Story's Eq. Jur. ss 716, 717, 724, note 2; Fry on Spec. Perf. p. 47, s 10, note 7; Pomeroy on Spec. Perf. ss 7, 8, ch. 1.

One of the principal objections urged against the decree is, that the subject matter of the action being stock in a corporation, there was an adequate remedy at law.

In the discussion of this objection, counsel for plaintiffs in error insist that equity will not enforce a contract for the transfer of ordinary mining stocks.

We find the authorities somewhat conflicting upon questions of this character. They are uniform on the proposition that a covenant for the delivery of government stocks and other public securities will not be enforced in equity. Ross v. The Union Pacific Railway Co. 1 Woolworth, 26; Pomeroy on Spec. Perf. s 17.

The reasons assigned for the rule respecting public stocks are that these stocks are always for sale, their prices are known, and the damages awarded at law will enable the injured party to make himself whole by purchasing in the market.

The English authorities decline to extend the rule to contracts for the delivery of the stocks of railways and other companies, and the English courts decree specific performance of such contracts, upon the ground that such shares or stocks are of uncertain value, and not always readily obtainable in the market. 1 Story's Eq. Jur. s 724a.

The rulings of the courts of this country have not been uniform upon these questions, some of them following the English rule; others, recognizing the fact that the reasons for that rule do not apply with equal force in this country, have adhered to the rules applicable to equitable remedies in other cases.

In Ross v. The Union Pacific Railway Company, supra, Mr. Justice Miller assigns strong reasons why a contract to transfer certain shares of that railway company should not be specifically enforced.

He says: 'I see no sound reason for any distinction between them and government stocks. They belong to a class of securities which are generally called stocks; they are the subject of every day sale in the market, and the rates at which they are selling are quoted in the public commercial reports, so that their value is as readily and certainly ascertained as that of government stocks. No especial value attaches to one share over another, and the money which will pay for one will as readily purchase another. The damages, then, for failure to deliver such shares may be awarded at law and be an adequate compensation for the injury sustained.'

These views appear to be sustained by the weight of authority, and upon principle seem equally applicable to the shares or stocks of all corporations concerning which the same facts therein recited exist. See Pomeroy on Spec. Perf. s 19, and cases cited.

Does the case at bar come within this rule? Do these same facts exist in respect to the shares of stock of this mining company?

We learn from the record that the entire stock consists of ten thousand shares of $10 per share, and that up to the time of the purchase by plaintiffs in error of the seven thousand three hundred and thirty-three shares, no sales had been made. The five original trustees held and owned up to that date two thousand shares each, which comprised the entire stock.

What were the values of these shares? Plaintiffs allege in their bill that the shares bought were reasonably worth $20 per share. The price paid was $7.50 per share, and a portion of the defendants say that was an adequate and fair price, while the defendant who negotiated the purchase avers in his separate answer that whether the shares are worth $20 per share is unknown to both parties.

It is fair to assume, then, that up to the time that these proceedings were instituted, the number of shares was limited; that these shares had no fixed or marketable value; that they were not selling upon the stock boards, and they were not quoted in the commercial reports. Certainly, then, their value could not have been 'as readily and certainly ascertained as that of government stocks.'

It is very apparent that there is a wide distinction between the shares of stock of such a mining company and public stocks, government securities, or the stock of corporations which have been placed for sale upon stock boards, and are the subject of every day sale in the financial markets of the country.

This case comes within the principle decided in Treasurer v Commercial Mining Co. 23 Cal. 391. Here, as in California, we have numerous mining corporations. It may likewise be said as to many of them, that their business and mining operations are in a peculiar condition; their...